4 ms·
To be fair to him, the argument he's making is in essence the same argument behind the patent system. That in a world of perfect economic competition, all econo
by whack 10y ago
To be fair to him, the argument he's making is in essence the same argument behind the patent system. That in a world of perfect economic competition, all economic profits will be competed away. In such a world, no one has an incentive to create or fund startups, because even if they are successful, their economy profits will vanish due to competition. Hence, if you want to be successful as a startup, you need to find a business model that grants you at least a temporarily Monopoly. This also happens to benefit society for the same reasons that a patent system benefits society.
You may not buy the intellectual argument above, but at least he isn't saying it with malevolent intent.
- kem 10y agoIs it really true that in a world of perfect competition profits would be competed away? It depends on what you mean by "perfect," but I always assumed there would still be differences in skills, access to certain resources, and whatnot, so that profits might be decreased, but not eliminated. The point you're making, though, is why patents are so important to get right and not overextend. I'm personally opposed to them completely, although I respect arguments for limited patents.
- slavik81 10y ago'Perfect competition' is a technical term, like 'ideal gas'. https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition
- whack 10y agoTo add on, my previous post was referring to "economic profits", which is different from nominal profits. A sublink from above clarifies this further. https://en.wikipedia.org/wiki/Perfect_competition#Normal_profit https://en.wikipedia.org/wiki/Perfect_competition#Normal_pro...
- Nomentatus 10y agoIt's probably worse than that. It's probably a "dollar auction." Worse than perfect competition, a species of prisoner's dilemma.
- nthcolumn 10y agoCan you expand on how a patent system benefits society? I'm not sure I buy the argument that it encourages innovation or even that innovation would be somehow stifled without. A certain kind of society maybe? If everything were up for grabs would you always have IP?
- whack 10y agoThe reasoning is that in a world without patents, companies wouldn't invest heavily in R&D. They would just wait for someone else to come up with a good idea, and then copy it. In a world where everyone does this, aggregate R&D investments would be much smaller than what they are now. Which would in turn reduce the rate of innovation and technological progress. Or at least that's the argument as framed by defenders of the patent system, which generally includes most mainstream economists and policy-makers. However, there certainly are numerous groups, such as libertarians and socialists, who would dispute many parts of the argument above.
- nthcolumn 10y agoYeah call me 'Ron Swanson'. I understand the 'R&D is expensive and people wouldn't bother' argument but I'm not sure I buy it? Won't people always create and invent? They can't help themselves. The actual people who have the ideas rarely benefit from them nowadays anyway. It can also have perverse consequences such as pharmaceuticals only investing in stuff that eases symptoms and not cures? (I have no actual data on that). Thanks.